New York Times Co. Puts Boston Globe Up for Sale
The publisher is working with Evercore Partners Inc. (EVR) as an adviser for a sale, Times Co. said yesterday in a statement. The company intends to focus its strategy and investment on the Times brand, it said.
Times Co., controlled by the Ochs-Sulzberger family, is coping with a difficult advertising market as spending on national campaigns continues to shrink industrywide. The publisher has sold other assets unrelated to the Times brand, getting rid of regional newspapers and About.com within the past 13 months.
The company held $955 million in cash and short-term investments at the end of last year, largely as a result of its asset sales. In addition to the Boston Globe, the company still owns the International Herald Tribune, considered the European edition of the New York Times.
Times Co. slid 1.4 percent to $8.90 at the close in New York. The shares have risen 4.3 percent this year, compared with a 5.3 percent gain for the Standard & Poor’s 500 Index.
Chairman Arthur Sulzberger, who appointed former head of British Broadcasting Corp. Mark Thompson as chief executive officer in August, has been relying on new revenue sources to increase profits. National advertising dropped 10 percent across all newspapers in the first nine months of last year, according to the Newspaper Association of America.
The Times newspaper now makes more money from readers than advertisers, helped by its online subscription program, which now has more than 640,000 paying customers. The Times made $781 million in circulation sales last year, leaving out an extra week, an 11 percent increase over the previous year. That compares with a 7.4 percent decline in ad revenue to $700 million for the same period.
The Boston Globe, by contrast, still relies primarily on ad dollars. The Globe, which also owns regional newspaper Worcester Telegram & Gazette, reported a 7.8 percent drop in ad revenue last year minus the extra week to $183 million. That compares with a 1.7 percent decline in circulation sales to $155.1 million in the same period. The newspaper’s online subscription program has about 28,000 paying subscribers, 8 percent more than it did at the end of September.
Times Co. tried to sell the Globe as recently as 2009 to bidders including an investor group led by Stephen Taylor, a member of the family that sold the Globe to Times Co. in 1993 for $1.1 billion, according to a person with direct knowledge of the previous sale process.
While at least one bid reached about $33 million in cash, wildly fluctuating estimates on the Boston Globe’s pension liability -- ranging from $110 million to $240 million -- scuttled any deal, the person said. Bidders, who would assume the full pension liability, were unclear on the total value of the pension. Goldman Sachs Group Inc. advised Times Co. on those discussions.
Times Co. is now seeking to divorce pension liability from the sales price, according to another person with knowledge of the process. That means a current buyer wouldn’t have to assume the costs of the pension and would therefore be expected to offer a higher cash bid. Had those same conditions applied in 2009, prospective buyers could have offered more than $100 million in cash, according to the person with knowledge of the previous deal process.
Eileen Murphy, a spokeswoman for Times Co., declined to comment.
Times Co.’s total pension plans, including employees of Times newspaper, were underfunded by about $396 million as of the end of last year.
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